How do you evaluate inventory provisioning for slow-moving and obsolete stock in a target?

You analyze inventory by ageing and turnover: how long stock has been held, days-inventory-on-hand by SKU/category, and the proportion that is slow-moving or hasn't moved at all. Compare that profile to the provision policy and historical write-offs. Red flags for under-provisioning: a rising stock balance outpacing sales (potential build-up of unsellable goods), large quantities aged well beyond normal cycle, products that are superseded/discontinued or near expiry, and a provision that's shrinking as a percentage while ageing deteriorates. You'd also check the valuation basis (lower of cost and net realizable value — is NRV actually being applied to old stock?), recent selling prices versus carrying cost, and whether write-offs spike just after the buyer would take over. Why it matters: over-valued inventory inflates both profit (lower COGS) and net assets/working capital, and feeds the NWC peg — so it's a QoE adjustment and a working-capital normalization issue, and persistent obsolescence is a sign of weaker demand or poor inventory management.